THOR INDUSTRIES INC [THO] Filings

10-Q 1 tho-20211031.htm 10-Q tho-20211031

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended October 31, 2021.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ____ to ____.

COMMISSION FILE NUMBER 001-09235

THOR INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

93-0768752

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

601 E. Beardsley Ave., Elkhart, IN

46514-3305

(Address of principal executive offices)

(Zip Code)

(574) 970-7460

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange

Title of each class

Trading Symbol(s)

on which registered

Common stock (Par value $.10 Per Share)

THO

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of November 29, 2021, 55,618,549 shares of the registrant’s common stock, par value $0.10 per share, were outstanding.

PART I – FINANCIAL INFORMATION (Unless otherwise indicated, amounts in thousands except share and per share data.)

ITEM 1. FINANCIAL STATEMENTS

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	October 31, 2021		July 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	336,237	$	445,852
Restricted cash	3,060		2,854
Accounts receivable, trade, net	1,095,970		796,489

Accounts receivable, other, net	70,403		153,443
Inventories, net	1,671,847		1,369,384
Prepaid income taxes, expenses and other	36,194		35,501

Total current assets	3,213,711		2,803,523
Property, plant and equipment, net	1,218,023		1,185,131
Other assets:
Goodwill	1,915,388		1,563,255
Amortizable intangible assets, net	1,298,289		937,171
Deferred income tax assets, net	1,288		41,216

Other	122,072		123,792
Total other assets	3,337,037		2,665,434
TOTAL ASSETS	$	7,768,771	$	6,654,088

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,055,342	$	915,045
Current portion of long-term debt	12,159		12,411
Short-term financial obligations	19,398		25,720
Accrued liabilities:
Compensation and related items	289,127		249,761
Product warranties	290,617		267,620
Income and other taxes	126,320		85,789
Promotions and rebates	105,209		128,869
Product, property and related liabilities	38,692		38,590
Dividends payable	23,917		—

Other	75,961		70,980

Total current liabilities	2,036,742		1,794,785
Long-term debt	2,232,266		1,594,821
Deferred income tax liabilities, net	149,811		113,598
Unrecognized tax benefits	19,925		15,844
Other liabilities	197,785		186,934
Total long-term liabilities	2,599,787		1,911,197
Contingent liabilities and commitments
Stockholders’ equity:
Preferred stock – authorized 1,000,000 shares; none outstanding	—		—
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 66,058,290 and 65,651,570 shares, respectively	6,606		6,565
Additional paid-in capital	473,775		460,482
Retained earnings	2,988,726		2,770,401
Accumulated other comprehensive income, net of tax	11,969		44,621
Less treasury shares of 10,438,198 and 10,285,329, respectively, at cost	(378,237)		(360,226)
Stockholders’ equity attributable to THOR Industries, Inc.	3,102,839		2,921,843
Non-controlling interests	29,403		26,263
Total stockholders’ equity	3,132,242		2,948,106
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,768,771	$	6,654,088

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended October 31,
		2021		2020
Net sales		$	3,958,224	$	2,537,360
Cost of products sold		3,302,800		2,158,508
Gross profit		655,424		378,852
Selling, general and administrative expenses		295,883		181,763
Amortization of intangible assets		33,214		27,427


Interest income		193		318
Interest expense		20,913		24,276
Other income, net		7,235		615
Income before income taxes		312,842		146,319
Income tax provision		68,039		30,680
Net income		244,803		115,639
Less: Net income attributable to non-controlling interests		2,561		1,882
Net income attributable to THOR Industries, Inc.		$	242,242	$	113,757

Weighted-average common shares outstanding:
Basic		55,422,854		55,238,164
Diluted		55,790,712		55,554,682

Earnings per common share:
Basic		$	4.37	$	2.06
Diluted		$	4.34	$	2.05




Comprehensive income:
Net income		$	244,803	$	115,639
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment		(35,167)		(18,993)
Unrealized gain on derivatives, net of tax		2,355		3,332

Total other comprehensive income (loss), net of tax		(32,812)		(15,661)
Total Comprehensive income		211,991		99,978
Less: Comprehensive income attributable to non-controlling interests		2,401		1,995
Comprehensive income attributable to THOR Industries, Inc.		$	209,590	$	97,983

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended October 31,
	2021		2020
Cash flows from operating activities:
Net income	$	244,803	$	115,639
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	31,739		26,812
Amortization of intangible assets	33,214		27,427
Amortization of debt issuance costs	2,424		2,723


Deferred income tax (benefit) provision	(5,253)		4,601
(Gain) loss on disposition of property, plant and equipment	629		(79)
Stock-based compensation expense	6,027		5,768
Changes in assets and liabilities:
Accounts receivable	(167,685)		(36,495)
Inventories, net	(236,915)		(322,047)
Prepaid income taxes, expenses and other	4,729		(14,857)
Accounts payable	71,613		127,585

Accrued liabilities	50,016		(20,601)
Long-term liabilities and other	6,451		2,234
Net cash provided by (used in) operating activities	41,792		(81,290)
Cash flows from investing activities:
Purchases of property, plant and equipment	(43,224)		(24,708)
Proceeds from dispositions of property, plant and equipment	141		975
Business acquisitions, net of cash acquired	(747,937)		(22,700)



Net cash used in investing activities	(791,020)		(46,433)
Cash flows from financing activities:

Borrowings on revolving asset-based credit facilities	660,088		—
Payments on revolving asset-based credit facilities	(500,000)		—
Proceeds from issuance of senior unsecured notes	500,000		—
Payments on term-loan credit facilities	—		(59,700)

Payments on other debt	(1,959)		(3,096)
Payments of debt issuance costs	(8,445)		—

Payments on finance lease obligations	(262)		(119)

Short-term financial obligations and other, net	(5,825)		(5,580)
Net cash provided by (used in) financing activities	643,597		(68,495)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(3,778)		(4,935)
Net decrease in cash and cash equivalents and restricted cash	(109,409)		(201,153)
Cash and cash equivalents and restricted cash, beginning of period	448,706		541,363
Cash and cash equivalents and restricted cash, end of period	339,297		340,210
Less: restricted cash	3,060		2,808
Cash and cash equivalents, end of period	$	336,237	$	337,402
Supplemental cash flow information:
Income taxes paid	$	17,956	$	48,788
Interest paid	$	16,868	$	18,207
Non-cash investing and financing transactions:
Capital expenditures in accounts payable	$	4,320	$	1,602
Quarterly dividends payable	$	23,917	$	22,700

See Notes to the Condensed Consolidated Financial Statements.


THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020 (UNAUDITED)

	Three Months Ended October 31, 2021
								Accumulated					Stockholders’
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at August 1, 2021	65,651,570	$	6,565	$	460,482	$	2,770,401	$	44,621	10,285,329	$	(360,226)	$	2,921,843	$	26,263	$	2,948,106
Net income	—	—		—		242,242		—		—	—		242,242		2,561		244,803
Restricted stock unit activity	406,720	41		7,266		—		—		152,869	(18,011)		(10,704)		—		(10,704)
Dividends $0.43 per common share	—	—		—		(23,917)		—		—	—		(23,917)		—		(23,917)
Stock-based compensation expense	—	—		6,027		—		—		—	—		6,027		—		6,027
Other comprehensive income (loss)	—	—		—		—		(32,652)		—	—		(32,652)		(160)		(32,812)

Acquisitions	—	—		—		—		—		—	—		—		739		739
Balance at October 31, 2021	66,058,290	$	6,606	$	473,775	$	2,988,726	$	11,969	10,438,198	$	(378,237)	$	3,102,839	$	29,403	$	3,132,242






	Three Months Ended October 31, 2020
								Accumulated					Stockholders’
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at August 1, 2020	65,396,531	$	6,540	$	436,828	$	2,201,330	$	26,993	10,197,775	$	(351,909)	$	2,319,782	$	25,787	$	2,345,569
Net income	—	—		—		113,757		—		—	—		113,757		1,882		115,639
Restricted stock unit activity	255,039	25		198		—		—		87,554	(8,317)		(8,094)		—		(8,094)
Dividends $0.41 per common share	—	—		—		(22,700)		—		—	—		(22,700)		—		(22,700)
Stock-based compensation expense	—	—		5,768		—		—		—	—		5,768		—		5,768
Other comprehensive income (loss)	—	—		—		—		(15,774)		—	—		(15,774)		113		(15,661)


Balance at October 31, 2020	65,651,570	$	6,565	$	442,794	$	2,292,387	$	11,219	10,285,329	$	(360,226)	$	2,392,739	$	27,782	$	2,420,521

See Notes to the Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(All U.S. Dollar, Euro and British Pound Sterling amounts presented in thousands except share and per share data or except as otherwise specified)

1. Nature of Operations and Accounting Policies

Nature of Operations

THOR Industries, Inc. was founded in 1980 and is the sole owner of operating subsidiaries (collectively, the “Company” or “THOR”), that, combined, represent the world's largest manufacturer of recreational vehicles (“RVs”). The Company manufactures a wide variety of RVs primarily in the United States and Europe and sells those vehicles, as well as related parts and accessories, primarily to independent, non-franchise dealers throughout the United States, Canada and Europe. The Company also sells component parts to both RV and original equipment manufacturers, including aluminum extruded components, and sells aftermarket component parts through dealers and retailers. Unless the context requires or indicates otherwise, all references to “THOR,” the “Company,” “we,” “our” and “us” refer to THOR Industries, Inc. and its subsidiaries.

The July 31, 2021 amounts are derived from the annual audited financial statements of THOR. The interim financial statements are unaudited. In the opinion of management, all adjustments (which consist of normal, recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented have been made. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2021. Due to seasonality within the recreational vehicle industry, and the impact of the ongoing COVID-19 pandemic and supply constraints on our industry, among other factors, annualizing the results of operations for the three months ended October 31, 2021 would not necessarily be indicative of the results expected for the full fiscal year.

2. Acquisitions

Airxcel

On September 1, 2021, the Company acquired Wichita, Kansas-based AirX Intermediate, Inc. (“Airxcel”). Airxcel manufactures a comprehensive line of high-quality component products which are sold primarily to original equipment RV manufacturers as well as consumers via aftermarket sales through dealers and retailers. Airxcel provides industry-leading products in recreational vehicle heating, cooling, ventilation, cooking, window coverings, sidewalls and roofing materials, among others. The purchase price of $750,000 in cash is subject to standard post-closing adjustments and was funded through a combination of cash-on-hand and $625,000 of borrowings from the Company’s asset-based credit facility (“ABL”). In conjunction with the Airxcel acquisition, the Company expanded its existing ABL facility from $750,000 to $1,000,000, favorably amended certain terms of the ABL agreement and extended the term of the ABL as discussed in Note 12 to the Condensed Consolidated Financial Statements. The interest rate remains unchanged.

The Company acquired Airxcel as part of its long-term, strategic growth plan and the acquisition is expected to provide numerous benefits, including strengthening the RV supply chain, diversifying its revenue sources and expanding Airxcel's supply chain business in North American and Europe. Airxcel will operate as an independent operation in the same manner as the Company's other subsidiaries.

The results of Airxcel are included in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income since the September 1, 2021 acquisition date. Airxcel recorded net sales of $88,778, net of intercompany sales, and net income before income taxes, net of intercompany profit elimination, was not material for the three months ended October 31, 2021. Net income before income taxes included a charge of $6,791 related to the step-up in assigned value of acquired Airxcel inventory that was included in cost of products sold in the current period, and also includes $2,184 in amortization expense related to the acquired intangible assets.

The following table summarizes the preliminary estimated fair values of the Airxcel net assets acquired on the acquisition date. The Company is in the process of conducting a fair value analysis. While all amounts remain subject to adjustment, the areas subject to the most significant potential adjustment are intangible assets, deferred income tax liabilities and certain accrued expenses. The Company expects to finalize these values as soon as practical and no later than one year from the acquisition date.


Cash	$	23,404
Inventory	71,150
Other assets	61,921
Property, plant and equipment	40,853
Amortizable intangible assets:
Customer relationships	284,000
Trademarks	56,900
Design technology assets	60,600
Backlog	700
Goodwill	368,639
Current liabilities	(109,336)
Deferred income tax liabilities	(79,115)
Other liabilities	(10,494)
Non-controlling interest	(739)
Total fair value of net assets acquired	768,483
Less cash acquired	(23,404)
Total cash consideration for acquisition, less cash acquired	$	745,079

On the acquisition date, amortizable intangible assets had a weighted-average useful life of 18.3 years. The customer relationships were valued based on the Discounted Cash Flow Method and will be amortized on an accelerated basis over 20 years. The trademarks were valued on the Relief from Royalty Method and will be amortized on a straight-line basis over 20 years. The design technology assets were valued on the Relief from Royalty Method and will be amortized on a straight-line basis over 10 years. Backlog was valued based on the Discounted Cash Flow Method and will be amortized on a straight-line basis over 2 months. The vast majority of the goodwill recognized as a result of this transaction is not deductible for tax purposes.

Tiffin Group

On December 18, 2020, the Company acquired all of the issued and outstanding capital stock of luxury motorized recreational vehicle manufacturer Tiffin Motorhomes, Inc., including fifth wheel towable recreational vehicle manufacturer Vanleigh RV, and certain other associated operating and supply companies, which primarily supply component parts and services to Tiffin Motorhomes, Inc. and Vanleigh RV (collectively, the “Tiffin Group”). Tiffin Group, LLC, a wholly-owned subsidiary of the Company, owns the Tiffin Group. Tiffin Motorhomes, Inc. operates out of various locations in Alabama while Vanleigh RV operates out of Mississippi.

The initial cash consideration for the acquisition of the Tiffin Group was approximately $300,000, subject to adjustment, and was funded through existing cash-on-hand as well as $165,000 in borrowings from the Company’s existing asset-based credit facility.

The following table summarizes the final fair values of the Tiffin Group net assets acquired on the acquisition date.


Cash	$	13,074
Inventory	116,441
Other assets	53,860
Property, plant and equipment	48,262
Amortizable intangible assets:
Dealer network	92,200
Trademarks	32,100
Non-compete agreements	1,400
Backlog	4,800
Goodwill	65,064
Current liabilities	(81,423)
Deferred income tax liabilities	(37,263)
Other liabilities	(7,203)
Total fair value of net assets acquired	301,312
Less cash acquired	(13,074)
Total cash consideration for acquisition, less cash acquired	$	288,238

On the acquisition date, amortizable intangible assets had a weighted-average useful life of 18.8 years. The dealer network was valued based on the Discounted Cash Flow Method and is being amortized on an accelerated basis over 18 to 20 years. The trademarks were valued on the Relief from Royalty Method and is being amortized on a straight-line basis over 20 years. Backlogs were valued based on the Discounted Cash Flow Method and were amortized on a straight-line basis over five to seven months. Generally, the goodwill recognized as a result of this transaction is not deductible for tax purposes.

The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2022 acquisition of Airxcel had occurred at the beginning of fiscal 2021 and the fiscal 2021 acquisition of the Tiffin Group had occurred at the beginning of fiscal 2020. These pro forma results may not be indicative of the actual results that would have occurred under the ownership and management of the Company.


	Three Months Ended		Three Months Ended
	October 31, 2021		October 31, 2020
Net sales	$	4,005,682	$	2,813,236
Net income attributable to THOR Industries, Inc.	$	249,055	$	117,489
Basic earnings per common share	$	4.49	$	2.13
Diluted earnings per common share	$	4.46	$	2.11

3. Business Segments

The Company has three reportable segments, all related to recreational vehicles: (1) North American Towables, (2) North American Motorized and (3) European. The operations of the Company's Postle, Togo Group (rebranded as Roadpass Digital in November 2021) and recently acquired Airxcel subsidiaries are included in Other. Net sales included in Other related primarily to the sale of component parts and aluminum extrusions. Intercompany eliminations adjust for Postle and Airxcel sales to the Company’s North American towable and North American motorized segments, which are consummated at established transfer prices generally consistent with the selling prices of products to third parties.

The following tables reflect certain financial information by reportable segment:


	Three Months Ended October 31,
NET SALES:		2021		2020
Recreational vehicles
North American Towables		$	2,240,834	$	1,392,044
North American Motorized		925,028		493,855
Total North America		3,165,862		1,885,899
European		632,997		602,488
Total recreational vehicles		3,798,859		2,488,387
Other		257,830		80,707
Intercompany eliminations		(98,465)		(31,734)
Total		$	3,958,224	$	2,537,360


	Three Months Ended October 31,
INCOME (LOSS) BEFORE INCOME TAXES:		2021		2020

Recreational vehicles
North American Towables		$	266,282	$	141,179
North American Motorized		88,898		41,567
Total North America		355,180		182,746
European		(17,976)		(5,506)
Total recreational vehicles		337,204		177,240
Other, net		23,529		11,490
Corporate		(47,891)		(42,411)
Total		$	312,842	$	146,319


TOTAL ASSETS:	October 31, 2021		July 31, 2021
Recreational vehicles
North American Towables	$	2,137,149	$	1,870,577
North American Motorized	1,244,251		1,073,506
Total North America	3,381,400		2,944,083
European	2,872,828		2,975,821
Total recreational vehicles	6,254,228		5,919,904
Other	1,223,899		272,350
Corporate	290,644		461,834
Total	$	7,768,771	$	6,654,088


DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:	Three Months Ended October 31,
		2021		2020
Recreational vehicles
North American Towables		$	16,302	$	15,807
North American Motorized		7,022		3,770
Total North America		23,324		19,577
European		34,713		31,323
Total recreational vehicles		58,037		50,900
Other		6,480		2,911
Corporate		436		428
Total		$	64,953	$	54,239


	Three Months Ended October 31,
CAPITAL ACQUISITIONS:		2021		2020
Recreational vehicles
North American Towables		$	13,134	$	9,408
North American Motorized		8,629		1,745
Total North America		21,763		11,153
European		14,802		9,894
Total recreational vehicles		36,565		21,047
Other		4,417		1,444
Corporate		34		361
Total		$	41,016	$	22,852

4. Earnings Per Common Share

The following table reflects the weighted-average common shares used to compute basic and diluted earnings per common share as included on the Condensed Consolidated Statements of Income and Comprehensive Income:


	Three Months Ended October 31,
		2021	2020
Weighted-average common shares outstanding for basic earnings per share		55,422,854	55,238,164
Unvested restricted stock units and performance stock units		367,858	316,518
Weighted-average common shares outstanding assuming dilution		55,790,712	55,554,682

The Company excluded 30,333 and 96,809 unvested restricted stock units and performance stock units that have an antidilutive effect from its calculation of weighted average shares outstanding assuming dilution at October 31, 2021 and October 31, 2020, respectively.

5. Derivatives and Hedging

The fair value of our derivative instruments designated as cash flow hedges and the associated notional amounts, presented on a pre-tax basis, were as follows:


	October 31, 2021		July 31, 2021
			Fair Value in				Fair Value in
			Other Current				Other Current
Cash Flow Hedges	Notional		Liabilities		Notional		Liabilities
Foreign currency forward contracts	$	20,674	$	282	$	41,899	$	88
Interest rate swap agreements	432,250		8,033		482,138		11,420
Total derivative financial instruments	$	452,924	$	8,315	$	524,037	$	11,508

Foreign currency forward contracts outstanding at October 31, 2021 are used to exchange British Pounds Sterling (“GBP”) for Euro. The total notional value of these contracts, including designated hedges and other contracts not designated, at October 31, 2021 is 15,000 GBP ($20,674), and these contracts have various maturity dates through January 31, 2022.

The Company entered into interest rate swaps to convert a portion of the Company’s long-term debt from floating rate to fixed rate debt. As of October 31, 2021, the outstanding swaps had notional contract values of $432,250, partially hedging the interest rate risk related to the Company’s U.S. dollar term loan tranche that matures in February 2026. The Company’s other interest rate swaps not designated as hedging instruments had a notional contract value of $31,168 at October 31, 2021.

Net Investment Hedges

The foreign currency transaction gains and losses on the Euro-denominated portion of the term loan, which is designated and effective as a hedge of the Company’s net investment in its Euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. Gains for the three months ended October 31, 2021, net of tax, were $9,240. Gains for the three months ended October 31, 2020, net of tax, were $5,482.

There were no amounts reclassified out of accumulated other comprehensive income (“AOCI”) pertaining to the net investment hedge during the three-month periods ended October 31, 2021 and October 31, 2020, respectively.

Derivatives Not Designated as Hedging Instruments

The Company has certain other derivative instruments which have not been designated as hedges. These other derivative instruments had a notional amount totaling approximately $31,168 and a fair value of $1,786, which is included in Other current liabilities in the Condensed Consolidated Balance Sheet as of October 31, 2021. These other derivative instruments had a notional amount totaling approximately $32,466 and a fair value of $1,948, as of July 31, 2021. For these derivative instruments, changes in fair value are recognized in earnings.

The total amounts presented in the Condensed Consolidated Statements of Income and Comprehensive Income due to changes in the fair value of the following derivative instruments are as follows:


	Three Months Ended October 31,
	2021		2020
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts	$	(141)	$	—
Interest rate swap agreements (1)	2,496		3,332
Total gain (loss)	$	2,355	$	3,332

(1)Other comprehensive income (loss), net of tax, before reclassification from AOCI was $607 and $558 for the three months ended October 31, 2021 and 2020, respectively.


	Three Months Ended October 31,
	2021				2020
			Interest					Interest
	Sales		Expense			Sales		Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	(13)	$	—		$	—	$	—
Interest rate swap agreements	—		(1,889)			—		(2,774)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Amount of loss recognized in income, net of tax

Interest rate swap agreements	—		87			—		(38)
Total gain (loss)	$	(13)	$	(1,802)		$	—	$	(2,812)

6. Inventories

Major classifications of inventories are as follows:


	October 31, 2021		July 31, 2021
Finished goods – RV	$	124,858	$	114,843
Finished goods – other	93,452		57,810
Work in process	432,513		376,594
Raw materials	706,689		602,106
Chassis	392,575		292,921
Subtotal	1,750,087		1,444,274
Excess of FIFO costs over LIFO costs	(78,240)		(74,890)
Total inventories, net	$	1,671,847	$	1,369,384

Of the $1,750,087 and $1,444,274 of inventories at October 31, 2021 and July 31, 2021, $1,086,598 and $946,767, respectively, were valued on the first-in, first-out (“FIFO”) method, and $663,489 and $497,507, respectively, were valued on the last-in, first-out (“LIFO”) method.

7. Property, Plant and Equipment

Property, plant and equipment consists of the following:


	October 31, 2021		July 31, 2021
Land	$	149,202	$	142,746
Buildings and improvements	847,315		837,065
Machinery and equipment	568,617		523,714
Rental vehicles	69,748		75,449
Lease right-of-use assets – operating	47,335		42,601
Lease right-of-use assets – finance	6,823		7,010
Total cost	1,689,040		1,628,585
Less accumulated depreciation	(471,017)		(443,454)
Property, plant and equipment, net	$	1,218,023	$	1,185,131

See Note 15 to the Condensed Consolidated Financial Statements for further information regarding the lease right-of-use assets.

8. Intangible Assets and Goodwill

The components of amortizable intangible assets are as follows:



	October 31, 2021				July 31, 2021
			Accumulated				Accumulated
	Cost		Amortization		Cost		Amortization
Dealer networks/customer relationships	$	1,139,935	$	347,875	$	861,562	$	327,751
Trademarks	366,152		66,670		311,208		62,675
Design technology and other intangibles	273,370		67,615		215,956		62,237

Non-compete agreements	1,400		408		1,400		292
Total amortizable intangible assets	$	1,780,857	$	482,568	$	1,390,126	$	452,955

Estimated future amortization expense is as follows:


For the remainder of the fiscal year ending July 31, 2022	$	126,544
For the fiscal year ending July 31, 2023	147,390
For the fiscal year ending July 31, 2024	134,611
For the fiscal year ending July 31, 2025	122,120
For the fiscal year ending July 31, 2026	110,251
For the fiscal year ending July 31, 2027 and thereafter	657,373
	$	1,298,289

Changes in the carrying amount of goodwill for the three months ended October 31, 2021 are summarized as follows:


	North American Towables		North American Motorized		European		Other		Total
Net balance as of August 1, 2021	$	344,975	$	53,875	$	1,041,697	$	122,708	$	1,563,255
Fiscal 2022 activity:
Goodwill acquired	—		—		—		373,685		373,685

Foreign currency translation	—		—		(21,552)		—		(21,552)

Net balance as of October 31, 2021	$	344,975	$	53,875	$	1,020,145	$	496,393	$	1,915,388

Changes in the carrying amount of goodwill for the three months ended October 31, 2020 are summarized as follows:


	North American Towables		North American Motorized		European		Other		Total
Net balance as of August 1, 2020	$	333,786	$	—	$	1,037,929	$	104,826	$	1,476,541
Fiscal 2021 activity:
Goodwill acquired	—		—		—		17,882		17,882

Foreign currency translation	—		—		(13,140)